Top Five Aerospace & Defence Stocks To Watch In 2026

This week we are looking at the aerospace and defence sectors. We have surveyed the entire global industry to locate these gems. All seem well-positioned to benefit from increased global defence spending in 2026, which shows no signs of letting up.

As we mentioned in a previous post, the defence sector is now considered an increasingly core holding for many global asset allocators. Beyond that, however, all these companies also have considerable exposure outside the defence business, with their products being used within the civilian zone as well.

I have included the 12 month performance of each stock for reference (in local currency terms).

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Colt CZ Group SE [PSE:CZG] +14%

Colt CZ is a leading global manufacturer of firearms, ammunition and tactical equipment, with legacy brands like CZ (Ceská zbrojovka) and Colt USA. Its products serve military, law enforcement, sporting and personal defence markets worldwide.

Over the next six months, CZG’s strategic acquisitions (most recently in the nitrocellulose and propellant segments) should enhance vertical integration and margin potential. Expansion into ammunition supply chains looks likely to support recurring revenue and leverage stable demand fundamentals across the defence and civilian markets.

Analyst coverage suggests modest upside to consensus price targets, and strong buy ratings indicate conviction in earnings resilience. With a diversified geographic footprint exposing it to the U.S., Europe and emerging markets, Colt CZ can ride secular growth trends, from heightened defence spending to increased sport shooting participation. Additionally, a near-2 % dividend yield and solid PE positioning relative to peers adds defensive appeal.

Hizeaero [KRX:A221840] +42%

Hizeaero is a South Korean aerospace parts manufacturer specialising in high-precision components for commercial aircraft (notably wing structures and fuselage panels) and also provides maintenance, repair and overhaul (MRO) services. The company is leans far more into the commercial rather than military aviation sector.

As global air travel recovers and airline fleets age, demand for quality parts and MRO services continues to trend upward. Hizeaero’s focus on core structural components for popular wide-body jets positions it to benefit from a stable revenue stream tied to aircraft production cycles and aftermarket spending. With airlines seeking to keep existing aircraft flying longer amid supply chain constraints for new builds, the aftermarket sector is ripe for growth.

Moreover, the company’s expertise in precision engineering gives it competitive advantage in a market where certification and quality matter. If aerospace OEM order books hold firm and MRO demand stays resilient, Hizeaero could see improved earnings visibility and stock performance over the next several quarters. That's on top of a solid 12 month performance of the shares already!